Fed’s Yellen: Tougher Rules Needed to Strengthen System

New rules designed to strengthen some of the financial system’s most complex corners are needed to prevent another financial crisis, Federal Reserve Vice Chairwoman Janet Yellen said Friday.

Measures included in international agreements, as well as the Dodd-Frank overhaul in the U.S. will help ensure banks and trading in areas such as the over-the-counter derivatives market become more stable, Ms. Yellen said in a speech at a lunch hosted by the American Economic Association and American Finance Association. She didn’t discuss monetary policy in her remarks, which focused tightly on financial regulations.

Tougher capital requirements for banks, as well as other measures aimed at managing the interconnectedness of banks will help rein in risks, Ms. Yellen said. Stronger capital rules “are not the only tool,” she said. “Multiple channels for reform initiatives will enhance systemic stability.”

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